The "Kerala model of development" is often cited as a path for developing nations to secure strong human development indices (literacy, health, etc.) but without first adopting the "Washington Consensus" (essentially higher, per capita GDP via free markets). Today's Economist Blog has a brief update on the model and the risk posed to it by the global economy and it reminded me of an old-ish article I never got around to blogging...

Back in September '07, NYT described the Kerala model and its adherents this way -

TRIVANDRUM, India -- This verdant swath of southern Indian coastline is a famously good place to be poor. People in the state of Kerala live nearly as long as Americans do, on a sliver of the income. They read at nearly the same rates.

With leftist governments here in the state capital spending heavily on health and schools, a generation of scholars has celebrated the "Kerala model" as a humane alternative to market-driven development, a vision of social equality in an unequal capitalist world.

...It also gained a reputation as a place hostile to business, with heavy regulation, militant unions and frequent strikes. There are fishing jobs but little industry and weak agriculture. Government is the largest employer; many people run tenuous businesses like tea shops or tiny stores.

However, if there's one thing economists of all stripes agree on, there's no such thing as a free lunch. They further note -

...far from escaping capitalism, they say, this celebrated corner of the developing world is painfully dependent on it.
"Remittances from global capitalism are carrying the whole Kerala economy," said S. Irudaya Rajan, a demographer at the Center for Development Studies, a local research group. "There would have been starvation deaths in Kerala if there had been no migration. The Kerala model is good to read about but not practically applicable to any part of the world, including Kerala."

..The number of overseas workers doubled in the 1980s, and then tripled in the 1990s. In a state of 32 million where unemployment approaches 20 percent, one Keralite worker in six now works overseas.

And both the NYT and the Economist blog go into some of the painful details as the global economic slow down works its way down to my home state -

THE lush state of Kerala in the south of India generates most of its foreign exchange either by exporting people or importing them. It earned almost 20 billion rupees ($500m) from foreign tourists in 2006 (the latest year for which figures are available) and about 245 billion (in the same year) in remittances from Keralites working abroad, 89% of whom go to the Gulf.

The state has an astonishing 24.5 emigrants per 100 households. Kerala's per capita output is one of the lowest in India, but its per capita expenditure is one of the highest. (Gopinath Pillai, a Singaporean diplomat of Keralite descent, describes the situation like this: one poor fellow works three shifts in Dubai, saving every penny to send home, where there will be eight guys reading two newspapers a day and discussing politics.)

With large numbers of these ex-pat Keralites employed in the Gulf's (a) oil-fueled (b) construction industry, the global downturn is likely to be a double whammy. While the rest of India is likely to do well over the next few years due to strong, internal trends, Kerala for all its efforts to insulate itself from the vicious swings of capitalism may wind up the most exposed.